PROFITABILITY RATIO ANALYSIS OF THE LEATHER TANNING INDUSTRY WITH CAPITAL STRUCTURE OF INTEREST LOAN SYSTEM

Financial distress that could lead to bankruptcy occurred in the leather tanning industry in Sukaregang-Garut. This condition can be observed from the decline in the number of the leather tanning industry. This study aimed to analyze the impact of loans with the interest system on the financial performance (profitability ratio) of the leather tanning industry. The research data were obtained by interview and analyzed using profitability ratio analysis, namely Gross Profit Margin (GPM), Net Profit Margin (NPM), Return on Investment (ROI), and Return on Equity (ROE). The analysis showed that GPM decreased by 3.65 percent, NPM decreased by 8.25 percent, and ROI decreased by 8.05 percent along with the increase in capital structure due to the increase in the number of loans with the interest system. ROE increased to 227 percent with the increasing capital structure due to the increasing number of loans with the interest system. DuPont ROE analysis shows that the increase in ROE was not caused by an increase in profitability but by an increase in the capital structure due to an increase in the number of loans with the interest system.